Data Heavy Week Drives Momentum into Bullion

28 Nov 2023

By Priyanka Sachdeva, Market Analyst for Phillip Nova

 

Gold prices hovered over a six-month-high on the Monday evening session and managed to close above the key Strategic zone of $2010 per ounce. Bullion seems to have witnessed a stop loss short covering over the weekend and derived some additional support from a slight pullback in the Dollar Index against the basket of major currencies. Technically, the Comex Gold futures hovered over a six-month high on Tuesday morning after a sustained close over the key zone of $2000-2010 per ounce in the Monday session.

 

Technically, two closes above the zone will mark the bullish trend reversal by confirming the Reverse Head and Shoulder pattern. A plausible upswing from here on will target the previous highs of $2080 per ounce before breaching newer highs beyond $2200 per ounce. On the downside, last week’s low of $1965 per ounce will continue to extend the first layer of support for Bullion. Extending gains from the previous session as of 11:30 am Singapore Standard Time, the Gold Comex December futures was trading at $2015.60 per ounce slightly up by +0.16%.

 

The upcoming key US inflation gauge on Thursday might add impetus to a possible end of FED’s tightening cycle which will likely bode well for the non-yielding Dollar-denominated Gold. The rally for the yellow metal has been predominantly subdued by the strength of the US Dollar on the back of the “higher for longer FED rate” narrative throughout 2023. A mellowed inflation print will open doors to rate cuts later in 2024 which can brighten the appeal of investing in Gold.

 

The US rate outlook and FED commentary following this week’s inflation print will be the key driver for Gold prices going forward. Fed Watch Tool currently reflects that markets are pricing in a 22% chance that the Fed’s policy rate will remain unchanged at 5.25%-5.5% by June next year. So if Powell’s speech pushes back the projections of rate cuts by mid-next year, the bullish momentum is Gold’s rally will be challenged further. The signs of a deteriorating global economy are expected to increase the demand for gold as a safe haven. However, since most major central banks have indicated that interest rates will remain high for a longer period, the future of the yellow metal is still uncertain.

 

APEX Gold Perpetual Futures

Trade APEX Gold Perpetual Futures With No Contract Expiry. Learn more here.

 

Trade Stocks, ETFs, Forex & Futures on Phillip Nova

Features of trading on Phillip Nova

  • Gain Access to Over 20 Global Exchanges
    Capture opportunities from over 200 global futures from over 20 global exchanges
  • Trade Opportunities in Global Stocks
    Over 11,000 Stocks and ETFs across Singapore, China, Hong Kong, Malaysia and US markets.
  • Over 90 Technical Indicators
    View live charts and trade with ease with over 90 technical indicators available in the Phillip Nova platform
  • Trade Multiple Assets on Phillip Nova
    You can trade Stocks, ETFs, Forex and Futures on a single ledger with Phillip Nova
An Exchange Traded Fund (ETF) is a marketable security that is formed to track nearly anything, ranging from a specific index, sector, commodity, or increasingly, theme. They are most commonly used to track a basket of stocks, and can typically be accessed through the same channels as regular stocks. ETFs are typically separated into passively-managed ETFs that simply mirror the security they are tracking (e.g. the STI), and actively managed ones that attempt to deliver higher returns or specific investment objectives, often with a pre-specified theme in mind (e.g. ARK Invest’s Innovation ETF).

Why should I trade in ETF CFDs?

  • ETFs have been growing in popularity over the years. 2020 was the best year for ETFs yet, with global equity ETFs seeing more than $1T in inflows within a 12-month period. Using CFDs to gain exposure to ETFs allows for greater capital efficiency because only a portion of the contract value is required as margin to establish a position.
  • ETFs are particularly popular with investors seeking a relatively hassle-free investing experience, while desiring exposure to a range of specific and relatively understandable securities. Trading ETF CFDs brings greater convenience by eliminating the need for traders to hold multiple currencies in order to access global ETFs.
  • An investor wanting exposure to the post-pandemic economic recovery could open a position in the well-known SPDR S&P 500 ETF (SPY), which tracks the performance of the S&P 500. Another investor that may be convinced of the future importance of Environmental, Social and Governance concerns (ESG) may find the increasing selection of ESG-themed ETFs that track a basket of high ESG-rating companies to be a good investment, rather than cherry-picking individual equities by hand. ETF CFDs can act as a powerful tool for traders can profit from both directions of the market by taking on long or short positions.

A look at two ETF CFDs we offer:

1) Has the ARKK been sunk?

ARK Innovation ETF (ARKK) ARKK is an actively managed ETF by ARK Invest that invests in a range of companies based on their innovative and industry-disrupting potential. ARKK’s largest holdings are in companies such as Tesla, Square, and Zoom. ARKK is down around -33% from peaking on 12th Feb and is currently in the red for the year to date as the market experiences a risk-off outflow of funds. Superstar fund manager Cathie Wood has however been consistently doubling down on her bets, buying even more shares in growth stocks that are going through their own tumultuous periods such as DraftKings, Peloton, Teladoc, and Tesla. In her view, ARKK is playing the long game, and remains steadfastly convinced in the long-term prospects of these growth stocks beyond this current bout of volatility. Similarly on outflows, investors are still betting big on ARKK as ARK Invest has only lost about $1.2B in assets this year across all its six funds, compared to seeing an inflow of $15.1B during the same period. Recently, investors have been nervously eyeing ARKK’s basket of tech stocks as their future earnings potential remain vulnerable to erosion through high inflation – the dominant concern of the market in recent weeks. As commodities – the major contributor to the recent heightened inflation fears – drops sharply from record highs, are investor concerns over hyperinflation overblown?

2) Searching for exposure to Asian equities?

iShares MSCI Asia ex Japan ETF (AAXJ) The AAXJ is currently trading -10.6% adrift of all-time highs seen in February, giving up gains in tandem with an Asia-wide equity sell-off at the time. Given that slightly over 40% of the ETF’s holdings are based in China, the ongoing tumult seen in Chinese equities currently have carried over nearly perfectly in the AAXJ, as Chinese investors take a breather after the stellar gains made over the past year. Looking ahead, Asia – and particularly China, is steaming ahead with its economic recovery. China is widely expected to be one of the best-performing major economies this year, providing a major boost to the outlook for corporate earnings. As the rest of Asia and the world gradually opens up their own economies, AAXJ is likely to again benefit from strong Asian outperformance amidst a strengthening trade outlook.

CFD is available for trading on Phillip MetaTrader 5 (MT5).

Features of trading CFD:

  • Trade in both the bull and the bear markets
    The ability to enter a long and/or short position allow traders to take advantage of both rising and falling markets.
  • Smaller barrier to entry
    Flexible and smaller contract sizes. This means that traders will be able to enter into a contract with a modest amount of capital.
  • No expiration date or risk of delivery
    Unlike futures which commonly have a fixed expiration date, CFD allows traders to perpetually hold the position(s). CFD is cash settled, no need to worry about the delivery of the underlying asset.

 

Benefits of using Phillip MT5:

Trade at zero commission on a dynamic platform that offers low spreads. Integrated with Autochartist and Trading Central Indicators, and available on mobile, web and desktop app, you will never miss a trading opportunity with Phillip MT5.

Register for a FREE 30-day Phillip MetaTrader 5 Demo Account

More Market Trends

Strategic Futures Trading During US Election Week

Read More >

Stock Market Trends and Election Outcomes: Getting Prepared for the 2024 US Elections with the Phillip Nova 2.0!

Read More >